How the McDonald’s Case over Employer Status Could Upend an Industry

Posted on March 15, 2016.

A court case between fast food giant McDonald’s and the National Labor Relations Board (NLRB) began last week in Manhattan amid predictions of sweeping consequences. The NLRB is backing employees of McDonald’s franchisees who want the fast food firm to be treated as a “joint employer” along with the franchise operator that hired them. If McDonald’s loses, it could face fundamental changes in its operating business model, the threat of unionization and collective bargaining across its more than 14,200 franchise outlets in the U.S., and increased vulnerability to all manner of litigation, according to experts.

In one stroke, all those consequences could extend to other businesses that use the franchising model, from hospitality to health services, analysts say. On the other hand, franchisees’ employees could get higher wages, perks, improved working conditions, more stable careers and a greater say in determining their rights.

The latest case has its origins in 2012 when fast food workers in New York City challenged McDonald’s in a strike, seeking better wages, improved working conditions and the right to unionize. Over the years, those clashes took on the banner “Fight for $15,” with support from the Service Employees International Union.